The Las Vegas chapter of the Culinary Union has voted to strike if their demands are not reflected in new contracts due by June 1. Union representatives demanded higher wages, protection from layoffs caused by new technology, greater workplace safety measures, and protection for immigrants with temporary status. The union and casinos recently avoided a strike, but the long-term trends are against them.
The potential strikes represent an age-old problem in America, but also fail to account for several factors. In addition to the damage in revenue, the demand for higher wages represents protectionist labor policies that will hurt casinos when (not if) another recession comes and spreads the cost (raises taxes) for other sectors. Historically, even a union victory will ensure their defeat long-term. They can’t fight the future as disruptive technologies render old jobs obsolete and create new jobs for which they aren’t qualified. Unions in the past were often a necessary correction to enact needed changes, but they often try to deny the reality of basic economics, making lower-skilled jobs more expensive than they should be and denying market forces.
The culinary union fighting to protect their jobs from technology would be like horse carriages and candle makers wanting protection from cars and light bulbs. New technologies and even new and simpler ways of doing things can disrupt established markets. The unions try to protect themselves, but when they have to use the power of organized labor and inspire government regulation to quash competitors, they are losing the battle.
The best example of this comes from ride sharing companies like Uber and Lyft. The disruptive companies took advantage of the fact that most people have a car and a driver’s license along with the app on their smart phone and wouldn’t mind making a bit of extra money on the side. Cab companies regularly lose money because ride sharing companies are usually safer, cheaper, and faster. The politicians and unions can’t come out and say that they are trying to regulate a company out of existence to protect politically connected unions, so they justify their reactions out of “safety concerns.” (Keep in mind the culinary union demands included additional safety measures and job safety from new technology.)
The taxi people argue that these regulations are needed to protect the people. In Las Vegas, they regularly cite all sorts of horror stories and then say that background checks and training ensure a safe ride. They even sent out regulators in ski masks to conduct stings of unauthorized drivers. But the average citizen with a driver’s license already knows how to drive, and even the well-regulated still break the law. Again, in Las Vegas, the cab company was notorious for “long hauling” customers. This was a practice of taking tourists the long way from the airport to their resorts on the strip, padding their fare by an extra ten or twenty dollars per customer. Uber, in contrast, provides the route and fare ahead of time to be approved by the customer on their phone. So the regulations touted by cab companies are pretty meaningless at their stated goals of providing safety, but are excellent at quashing the competition and making existing services more expensive.
Labor unions started to fight legitimately unsafe and even exploitative working conditions faced by hardworking Americans. But they have morphed into something counterproductive and even damaging for the American worker. As early as 1903, Muckraker Ray Blacker wrote about violent coal unions. In an article called “Right to Work,” he highlighted the unsafe and unsanitary working conditions of the mine. But he also criticized the union members who terrorized and attacked non-striking workers.
By the 1950s, the coal union went on strike and demanded such high wages and benefits that it made coal too expensive and unreliable. Companies started looking for oil-based products instead, and coal companies looked for less expensive solutions to their union workers such as automation. The union efforts were so good at destroying coal jobs that Thomas Sowell and others called the labor president “the world’s greatest oil salesman.”
This returns to the basic economic point that applies to every sector of the economy beyond Las Vegas concerns. Unions make labor so expensive that companies can’t expand, or companies turn to machines and computers. It’s no surprise, for example, that the fight for a $15 minimum wage caused companies to adopt self-service kiosks. Unions forced the company that makes Twinkies and Wonder Bread to move their own products on two different trucks, facilitating bankruptcy. They force cheaper and more reliable transportation companies like Uber and Lyft into costly regulations. Teachers unions are so effective, they make New York City pay underperforming teachers or discipline teachers not to teach. Here in Las Vegas, despite some of the lowest test scores in the nation and the largest tax increase in state history, they prevent sound assessments of teaching quality and demand pay raises so frequently they cause yearly budget crises.
Union workers live in a free country, and they naturally want to have steady and high-paying jobs. But they are fighting against powerful disruptive forces such as automation and the importation of unskilled labor. They will end up making their jobs so expensive and unreliable because of overly generous and strike-enforced contracts that they are making automation look even more attractive. On top of that, they are forcibly trying to make the jobs high-paying for them but are shutting out newcomers who could use the job experience that comes from an entry-level and low-skilled position. Thus the strikes seem counterproductive at best. Even though the two sides averted a strike and decisive showdown, the threat of one and their specific complaints indicate that the culinary union is on the wrong side of larger trends like automation and disruption.